Learn what is net worth, how much you are worth financially, and why it is important.


Defining Net Worth

Your net worth is the sum of your total assets less your total liabilities.

Net Worth = Total Assets – Total Liabilities

Assets: What you own

Liabilities: What you owe

Example of Assets

  • Bank accounts savings
  • Fixed deposits
  • Cash
  • EPF
  • Property
  • Unit Trusts
  • Shares
  • Investment assets

Example of Liabilities

  • Education loan
  • Car loan
  • Personal loan
  • Credit card owing
  • Property loan


Measuring Net Worth

Your net worth gives you snapshot of your current financial value. Knowing your net worth in itself isn’t of much use unless you are able to benchmark or compare your net worth. It is not a competition with another person though but for your own self to know where you are at.

Common Net Worth Benchmarks

  1. Target Net Worth = [Current Age – 25] x [Annual Income ÷ 5]
  2. Target Net Worth = [Current Age] x [Annual Income ÷ 10]

Example: Mr Poh Kai Chan

  • Age: 30
  • Annual Income: 60,000
  • Assets: 200,000
  • Liabilities: 170,000
  • Net Worth: 30,000

Target Net Worth

  1. [Current Age – 25] x [Annual Income ÷ 5]
    [30 – 25] x [60,000 ÷ 5]
  2. [Current Age] x [Annual Income ÷ 10]
    [30] x [60,000 ÷ 10]

Overall: Mr PKC is a below average accumulator of wealth as his Net Worth is at 30,000 versus his goal of 60,000-180,000


Example: Ms Savi Pandai

  • Age: 40
  • Annual Income: 100,000
  • Assets: 1,000,000
  • Liabilities: 500,000
  • Net Worth: 500,000

Target Net Worth

  1. [Current Age – 25] x [Annual Income ÷ 5]
    [40 – 25] x [100,000 ÷ 5]
  2. [Current Age] x [Annual Income ÷ 10]
    [40] x [100,000 ÷ 10]

Overall: Ms SP is an above average accumulator of wealth as her Net Worth is at 500,000 versus her goal of 300,000-400,000


Growing Net Worth

Growing your net worth is a slow and steady process. Different people may tell you different things based on their own experiences and thinking. Some may advise you to live debt free pointing out the homeless guy on the street may actually have a higher net worth than someone driving a fancy car and living in a fancy house but drowning in debt. While others may advise the usage of debt as leverage to use other people’s money.

“Stay committed to your decisions, but stay flexible in your approach” ~Tony Robbins

Net worth can be grown slowly, simply and surely through a committed plan to save and invest. Investments and compounding interest can help you grow your net worth at a faster pace if done wisely. Avoid making big financial mistakes and taking on unnecessary (or too much) debt.

7 Net Worth Hacks

  1. Track your cashflow and net worth.
  2. Review and cut down your liabilities.
  3. Increase your income and savings.
  4. Reduce your expenses and debt.
  5. Invest in assets that grow over time.
  6. Avoid unnecessary spending and unnecessary debt.
  7. Talk to a financial advisor to help you optimize your personal finances.


More Info


Next: Learn on Getting Out of Debt


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